For many people, one of the main attractions of Bitcoin as a digital or virtual currency, is its quantity limited by design. That's right, according to how the bitcoin protocol is designed, in total there will be 21,000,000 "coins" that will be available in full until the year 2140. Meanwhile the creation of new Bitcoins is generated at a relatively predictable pace and at the moment There are approximately 12,500,000 Bitcoins in total.
What implications does this limit have?
The limited nature of the total number of Bitcoins available brings with it several consequences, desirable or undesirable, according to the person to whom it is asked.
The first and most important consequence of this limitation is that the currency has a deflationary profile.
To understand this, it is necessary first to remember that most (if not all) sovereign currencies are currently controlled by central banks, which are in charge of keeping inflation at acceptable levels. Inflation is the property of the currencies for which they tend to lose value over time.
This property of "losing value" over time is celebrated by some and hated by many others. The former argue that inflation is necessary since it stimulates consumption (eg if my money will be worth less tomorrow than today, I better buy today) and therefore, the economy. The latter argue that inflation is one more of the subtle "taxes" that affect the population, especially the one that has fewer resources, since it makes the hard-earned money worth less over time, which in turn stimulates excessive consumption. This situation, they argue, affects the poor more than the rich, because the latter have greater access to enduring assets (eg real estate) and investments than the former, which also serves to perpetuate inequality and the status quo.
Now that we understand the concept of inflation in simple and general terms, it is easier to understand the deflationary nature of Bitcoin.
When there is a limit on the amount of Bitcoins that will be generated in total, if this virtual currency becomes a means of daily exchange the price or value per unit will have to go up with the passage of time in order to have sufficient liquidity to cover to a much bigger market.
In practical terms, the total Bitcoin market (some call it market cap) has recently fluctuated between $ 5,000 and 10,000 million dollars. Although these figures sound spectacular for any ordinary individual, the reality is that within the general order of things, these amounts are too small to cover any significant part of world trade, which is one of several uses They can give Bitcoin.
This means that if the increase in the adoption of bitcoin for this and other uses worldwide continues, it will most likely imply the increase in the price of each unit. That is, if today 1 Bitcoin is worth about $ 500 USD, so that it can cover three times the market, it would have to be worth at least $ 1,500 USD each unit.
This deflationary property has attracted a large number of speculators and investors who see Bitcoin as an investment medium of great risk, but with enormous potential for return and it is no wonder if the growth of the value of each Bitcoin has been so far around 10,000% in a span of just about 3 years.
However, before running to buy Bitcoins remember that in this system as in any other risk investment, no previous performance ensures future returns. So think well before investing.
But can someone generate more Bitcoins than planned?
A frequent question that arises among people who are just beginning to understand the operation of the Bitcoin protocol is whether it is possible for the inventor of bitcoin or some other person to arrive to create more Bitcoins out of the 21,000,000 that are originally programmed.
The answer to this frequent doubt is: no.
First, remember that the bitcoin protocol is decentralized and open source, which implies that it does not have a central owner or controller and that the code can be verified by anyone to make sure that the total limit exists. Second, it is important to mention that, in the way the protocol works, any change in the operation of the protocol must be authorized by more than 50% of the participating miners, that is, there must be a majority consensus to make this change, which is practically impossible since it would be contrary to the interests of the same miners to create more Bitcoins, because that would dilute the value of the Bitcoins that each of them has in their possession.
What is your point of view?
